How Singapore’s second billion-dollar startup is revolutionising retail

With retailers facing the risk of up to US$1t in losses due to out-of-stock products, according to a study by IHL Group, retailers are in an ever challenging position to ensure that the products lining their shelves are stacked and positioned with pristine accuracy.

Against a backdrop of fierce competition from up to 50,000 supermarket brands, retailers stand a stronger fighting chance of boosting sales when taking transparency in stocks, product placement, and number sales into account. Retail software and analytics firm Trax aims to plug this market gap by offering specialised software for both brands and retailers to help track product performance.

Founded in 2010, Trax–which derived its name from movement tracking–utilises fine-grain image recognition to identify and track the availability of around 5,000 different products in brick-and-mortar store shelves. Using 5,000 different combinations, Trax identifies more than 250 million products monthly and provides real-time data to more than 170 retailers and brands worldwide.

Global brands such as soda giant Coca-Cola, the world’s largest food company Nestle, and multinational brewer Anheuser-Busch InBev count among its patrons. Today, the firm operates in more than 50 markets globally and has 10 subsidiaries.

In July, the firm raised $137.5m (US$100m) in its latest funding round, propelling its valuation to as much as $1.3b and effectively sealing its status as Singapore’ second billion-dollar startup. The company aims to use the proceeds from the funding round to deepen its penetration through Trax Retail Watch, a product that enables retailers to install six cameras in a store.

In an exclusive interview with the Singapore Business Review, Trax CEO and co-founder Joel Bar-El shares how the company grew from its goal to provide transparency in retail shelves to becoming the city state’s second unicorn.

What is Trax all about? What problems do your products and services solve? Compared to doing things manually or compared to the standard offered by other competitors, how much time and cost is saved through your method?

Bar-El: Trax is solving a very broad problem within the retail industry and introduces transparency into brick and mortar stores. Before, companies were selling their goods by retailers but with no real visibility– that is, what is happening in the store itself, where the products are located, which adjustments they need to have in terms of competition around them. Usually, they arrange the placement to a standard. We try and provide full transparency by digitizing retail shelves in brick and mortar stores, and we were the first pioneer company to do that and today, we are the global market leader for that.

There are a few small companies who are trying to do the same and they are traditional auditing companies who are doing it manually without digitization, which is the innovation we are bringing to the table. We are eliminating around 60% to 80% of the time of manual auditing method. And we are capturing around 10 times more data than a human person can do at the same time.

What’s the story behind your name? Who are the founders and how did they start your business?

Bar-El: The idea is that Trax means “to track a movement and pay attention”. There are two founders. I come from a technological background and worked at standard digitism for many years before moving on to being an entrepreneur. The other co-founder, Dror Feldheim, came from a retail execution background. He came up with a business idea of what needs to be sold. He was working for many years for a private equity in Europe that’s invested in a consumer brand. That is where he learned around the hunches regarding product placement and thought of how to make them more effective. When we met, he came up with the idea and I came up with a technological solution. This is how Trax came to life.

What is your edge against other digital and image recognition companies?

Bar-El: Image recognition is a very broad space. Often than not, people look at image recognition and think of it similar to facial recognition technology. In reality it’s not. We are tackling an area within image recognition called fine-grained recognition, which is the ability to identify a unique item out of many similar items.

For Trax, we have 5000 combinations to identify a product, because no product looks like another product. We have different materials such as tin, paper, glass, and plastic coming in different shapes, coming in different sizes, standing on the shelf in different permutations, and we need to identify them from all sides. So arguably this is 5000 times more difficult than face recognition. And unlike faces of humans, whose structure do not change almost at all in retail 30% of the physical look of the products on shelves change every year. So traditional image recognition companies find it extremely difficult to solve the problem that we have solved. In Trax, we cannot do face recognition. But we can identify any product on any shelf in any store.

How do you see the retail tech landscape in Singapore, and by extension in Asia developing? What prominent technologies will characterise this shift and how do you plan to stay ahead of constant disruptions in the retail sector?

Bar-El: We are working constantly to improve our products. Today, a significant portion of our budget is dedicated specifically for innovation. We have been over 200 developers and about 40 of them are working only on new innovation and developing new capabilities and new algorithms.

There is obviously a lot of innovation now in the retail space. There are companies who are coming out with robotics for the aisle, drones, you even have AI technologies around. Another technology which came to light is the cashier-less stores like Amazon Go where people can take things from the shelf and then walk out of the store without moving through the cash registry. All of those technologies are quite innovative, but none of those is actually replacing what Trax can do.

You’ve made a string of acquisitions in the past years including Shopkick, a customer-tracking service app; LenzTech, a Beijing computer vision service provider. You are also reportedly in the works to buy another European competitor. What advantages do these acquisitions offer to Trax?

Bar-El: Each one of them represented a different strategic value for the company. The acquisition of LenzTech helped us gain an R&D Center in China which we have wanted to have for a long time in order to better serve the Chinese market in their own local language [and]their own local UI practices. It also helps to have a better footprint in China and since LenzTech was our former competitor. We have gained additional clients, especially local clients, from within the market.

Planorama was a direct global competitor. [The acquisition] helped us in terms of solidifying our leadership position in the global market as well as gaining additional clients and additional employees coming from Planorama with the full knowledge and experience our market, which is quite niche.

The acquisition of Shopkick helped us tap into the crowdsourcing area together with Quri, which we bought in early 2018. In the US alone there are over 2 million crowdsources which we engage and track on a daily basis and we aim to develop our ability to take the data that we are gathering in the brick and mortar stores and turn them into data that crowdsources can act upon. This is part of our future premise.

The company also has an existing partnership with Nielsen that aims to ‘digitise the shelf.’ Can you elaborate on this? What are your plans to take this further?

Bar-El: Nielsen is a very important partner of Trax. We have a specific program which we have developed together with them called the Trax-Nielsen Shelf Intelligence Suite. Essentially, with Nielsen, we are measuring complete markets on a syndicated basis. We are capturing the information from a sample source and providing a dashboard to our clients so they can monitor the performance of their markets and their brands.

Reports said that Trax is eyeing an initial public offering in the US within the next 18 to 24 months, although the company is also exploring the possibility of a dual listing in Singapore. Can you elaborate more on planned move? How do you plan to use the proceeds if ever and what are the advantages of this move?

Bar-El: We can definitely confirm that we are planning to do an IPO in the US in the next 18 to 24 months. With regards to the potential listing, this is still under discussion. We have not yet completed the analysis for such an option.

With regards to the advantages of being a public company, we think that it will help Trax continue its expansion and growth within the public market mainly by acquiring or absorbing more talented and experienced US employees. As a public company, we believe that we will be easier for us to attract talent into Trax. We also think this will reposition track in a virtual way to negotiate larger and more expansive contracts with our existing clients. With all the credibility from the government that comes with being a public company, we believe it will also give us the ability to more easily acquire other businesses because as a public company, your shares can be used as currency to make such acquisitions. We [also] believe that [going public] will help us to get better exposure from the global media.

How do you feel about being tagged as Singapore’s second unicorn?

Bar-El: Our aim is not to become Singapore’s second look unicorn to begin with. We merely aim to grow the company further: we service our clients in the best way possible, and disrupt the industry into a new age of digital retailing.

Like any company that grew from being very small to the size we are today, there are a lot of hardships around managing a lot of people in different geographies. I think that was the biggest challenge for Trax. I would say overcoming those differences of timezones, cultures, and different people working in different places was the greatest challenge of all.

How would you describe Singapore’s current startup landscape? What advice would you give to startups?

Bar-El: The main advice I can give to new startups in Singapore is first, to leverage the vast economies that are surrounding Singapore which can give early adoption clients to them, mainly Indonesia, being a prime one. There are also Thailand, and the Philippines, in Southeast Asia. All of those markets have tremendous amount of businesses and entities which are in large proximity to Singapore. Leverage that into gaining early traction and early win(s).

The second advice I can give them is to always think global: try to position their company into the global market rather than trying to focus on solving local problems and try to generalize that solution to feed into global markets as well. Even if they might not have those initial global context at the beginning of their story should have a global mindset from the start.

Thirdly, they should leverage the Singapore government’s willingness to help the startup economy. That is, in the way of grants in production and other means that the Singapore government is lending a hand. Tapping into that government support is highly lucrative and important for them to have.

The company is setting its sights to China next. What are your future plans and how do you see Trax developing in the next five years?

Bar-El: China is the second largest market in the world when it comes to retail after the US. When it comes to retail, the Chinese market is highly fragmented; there are multiple chains in multiple cities. All of that makes it a very good market for Trax to come into, and also to help those retailers continue to compete domestically and become more efficient as they face the fierce competition in China.

In the next few years the first thing the Trax should be doing is becoming a public company. Another thing is that we are going to enhance our solution to tap into consumers as well. We always saw the retail industry as an industry that belongs to three major parties: these are the brand, the retailers and the consumers. Today, we are providing complete solutions for brands and retailers. One of the areas we would like to expand into is to take the data that we are gathering within retail stores and place it in the hands of consumers.

We have two main ways to do that. One is allowing navigation within the retail stores for consumers. We’ve developed our own equivalent of a Google map, so every brick and mortar store will be completely mapped and people can navigate through it to find what they’re looking for. The second one is interaction with the product. We have the augmented technology to allow consumers to filter the product in front of them when they’re shopping so their lifestyle preferences, allergies, dietary restrictions [are taken into account] and they can see what is gluten free, what is the non-[meat] region, or if it’s good for their cholesterol or heart conditions, the like.